To establish a buzz many music artists continue to use Billboard reviews, radio promotion, music videos, and sites such as Youtube and Facebook to generate excitement and sales. However, the technological age has led to big changes within the music industry. Due to social media, music streaming, and online video content artists are now touring more than ever as concerts are the primary source of income for artists (Bary, 2017).
One of the biggest demographics in music are millennials who make up 40% of the industry’s market share. This group has led to a shift in promotion priorities for many artists. Millennials are not spending money on purchasing physical copies of records, instead, attending live music events is a key component. (Live Nation Annual Report, 2016). This rapid growth has enabled Live Nation Entertainment, a live music company, to expand exponentially.
In December of 2005, Live Nation cut ties from Clear Channel Entertainment and became its own entity (Live Nation Annual Report, 2016). With this separation came big changes, Michael Rapino became the new CEO and it began closing divisions in order to focus strictly on live entertainment (Live Nation Entertainment, Inc. Profile, 2016). Since the launch of the company in 2005, Live Nation has been quickly building its brand name. Located in Beverly Hills, California, it employs approximate 8,300 full-time employees and has over 37,000 people in seasonal positions (Live Nation Annual Report, 2016). Due to the magnitude of success, Live Nation rightfully considers itself to be the world’s largest live entertainment company.
Business ModelThe short and sweet business model of live entertainment is to get fans in seats. In order to achieve this goal, companies invest their time working with fans, artists, and brands in order to grow and improve. To generate the most “treasured memories” Live Nation focuses on four main segments: concert promotion, sponsorship and advertising, ticketing and artist management (Live Nation Annual Report, 2016). These diverse segments are encapsulated in a business model known as the flywheel meaning that the core business drives the success of the others (Chapple, 2016). CEO Michael Rapino states “The concert segment continues to be the engine that powers the Live Nation flywheel strategy, growing the profitability of the concert business while also driving our advertising and ticketing businesses (Live Nation Entertainment First Quarter Financial Results, 2017).”
The breakdown of the business is distinct given its multiple segments. For concerts, it provides worldwide promotion of live music events in its owned or operated venues around the globe. In the sponsorship and advertising segment, Live Nation uses a sales force to give clients a magnitude of promotional and sponsorship options within its fan, venue and ticketing outlets. The ticketing business sells tickets for both their own events as well as their clients’ events using their websites: www.livenation.com and www.ticketmaster.com, mobile applications, and call centers (Live Nation Annual Report, 2016). Lastly, the artist nation segment provides management services to artists, delivers merchandise, licensing and e-commerce solutions, and has a 360° deal which gives support to an artist in every area Live Nation provides. (“Live Nation Network Sponsorship”, n.d.).
Live Nation owns 196 venues across 11 countries. These consist of amphitheaters, clubs, theaters, and international venues (Live Nation Entertainment, 2017).Live Nation constantly acquiring more and more venues. One of its most recent acquisitions is right here in Syracuse, New York – Lakeview Amphitheater.
In 2015, Onondaga County signed a three-year deal with Live Nation giving the company ownership of all its promotions. Structures are not the only asset Live Nation procures; it also has many talented people under its corporate roof. It has 360° deals with global superstars, manages over 350 artists, and is in charge of merchandise.
When it comes to making money live music entertainment companies offer seamless personalized experiences from the initial buying of tickets to the concert experience. With access to fans worldwide live entertainment companies enable artists to build revenue from touring, as this is the best way to connect with their fans.
From Live Nation’s four main segments, it generates revenue across the live entertainment industry. In 2016, total revenue across all four segments reached $8.4 billion, which is its highest earnings to date. Concerts and festivals are the driving force of revenue comprising 70% of income (Live Nation Annual Report, 2016). Jennifer McMaster, Premium Seating & Sales Coordinator at the Lakeview amphitheater shared insight on how amphitheaters drive revenue “more events equal more revenue, but there are many aspects that go into securing an act at the amphitheater including but not limited to timing, pricing, location, and even just the reputation of the amphitheater within the touring industry. Our touring department works on tour negotiations year-round, it is a never-ending attempt to contract more events that fit our market (J. McMaster, personal communication, September 11, 2017).”
Sponsorship & advertising accounts for about 5% of Live Nation’s total revenue. It generates a magnitude of this from sales with clients. Live Nation has over 50 sponsors each spending more than $1 million a year. Ticketing accounts for 20% of total revenue. With Live Nation working predominantly as an agency business, it sells tickets for events on behalf of the artist and then retains a portion of the service charges (Live Nation Annual Report, 2016, p.5). Finally, Artists Nation produces 5% of the total revenue by providing management services to artists and in exchange receives a commission on the earning (Live Nation Annual Report, 2016).
By covering every aspect of live entertainment, Live Nation faces competition from all sides. One of its biggest live music competitors is Anschutz Entertainment Group or AEG. Live Nation also faces competitors in ticketing with companies such as tickets.com and AXS. Lastly, in artist management, its biggest risk is Red Light Management (Live Nation Annual Report, 2016).
Current NewsOver the years instead of fans getting their hands on tickets to see their favorite artists, ticket bots have been scoping them up. To help combat this problem Live Nation launched a program called Verified Fan on its Ticketmaster site. In order to give super fans a better chance at obtaining tickets, Verified Fan allows consumers to register in advance for tickets and then participate in artist related tasks in order to maximize their chances of getting a seat to see their favorite star. One of the most recent artists to jump on this program is Taylor Swift. She is using the platform to urge fans to register now for her Verified Fan program. There they can buy merchandise or watch her videos in order to accumulate points and move up in line in the hopes of garnering a great seat for her anticipated tour (Levine, 2017).
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